5 Top Dividend Aristocrats Yielding Up to 7%
March 5, 2020
Top Dividend Aristocrats to Consider After the Stock Market Plunge
Investors have plowed billions of dollars into the stock market over the past year, betting on a robust economy and growing profits. Now Wall Street has to give that a rethink.
In February, fears of a coronavirus pandemic sent shock waves through the financial markets. Stocks plunged. Gold soared. Oil crashed. Bonds surged.
And investors have good reason to worry. While the coronavirus likely won’t kill millions of people, quarantine efforts have knocked the air out of business activity. That could very well push the global economy into a recession by the end of the year.
So if the economic engine kicks and sputters for a few quarters, what should you do with your money?
You could do worse than doubling down on Dividend Aristocrats. This group comprises all the S&P 500 companies that have raised their payouts to shareholders for at least 25 consecutive years. In other words, these companies have soldiered through events far worse than a pesky virus.
Better still, the recent stock market plunge has turned some of these Dividend Aristocrats into veritable cash cows. I’ve highlighted a few of my favorites below.
To be clear, this list doesn’t represent a series of “buy” recommendations. It does, however, serve as a great starting point for further research.
|
Company & Stock Ticker |
Market Cap |
Yield |
|
Exxon Mobil Corporation (NYSE:XOM) |
$221.9 Billion |
6.6% |
|
Chevron Corporation (NYSE:CVX) |
$185.2 Billion |
5.2% |
|
Consolidated Edison, Inc. (NYSE:ED) |
$29.4 Billion |
3.5% |
|
Genuine Parts Company (NYSE:GPC) |
$13.0 Billion |
3.5% |
|
Kimberly Clark Corp (NYSE:KMB) |
$50.7 Billion |
2.9% |
(Source: Google Finance, last accessed March 5, 2020.)
Let’s say a few words about these Dividend Aristocrats.
Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) both come with some of the highest payouts around. Investors have soured on these stocks because low oil prices have taken a whack out of their profits. And with renewables like wind and solar taking market share, the oil industry doesn’t appear to be on the verge of a comeback anytime soon.
That said, no one collecting a seven-percent yield deserves much in the way of earnings growth. They’re getting a large dividend up front that likely won’t grow substantially in the years ahead. But investors who sit around patiently reinvesting their distributions will likely knock the socks off other investors as time goes by. It’s a fun thing to watch.
Consolidated Edison, Inc.’s (NYSE:ED) story hasn’t changed in years: it’s a well-run power company serving millions of customers in New York State and New Jersey. In a recession, people don’t stop turning on the lights, heating their homes, or watching TV. As a result of these steady cash flows, executives have managed to boost the company’s dividend every year since 1972. Profitable and predictable. If the global economy catches a cold, Consolidated Edison is like chicken soup for your portfolio.
If your goal is to impress your co-workers around the office water cooler, then Genuine Parts Company (NYSE:GPC) probably isn’t for you. This Dividend Aristocrat, which makes replacement auto parts, is terribly boring. But the company gushes free cash flow—$594.1 million in 2019—and has hiked its dividend every year since 1956. A 3.5% upfront yield plus steady distribution hikes each year should translate into respectable returns over the long haul.
Finally, income hunters should take a gander at Kimberly Clark Corp (NYSE:KMB). This maker of paper products like diapers and tissues has struggled in recent years due to swings in the foreign exchange market. Because the company makes most of its money overseas, its profits have suffered due to the recent run-up in the U.S. dollar. Over time, however, these currency swings tend to come out in the wash. Investors scooping up shares now can get a piece of a wonderful business at a reasonable price. Then they can sit back and collect a nice three percent dividend yield.
